Marginal revenue is best described as?

Marginal revenue is defined as the additional revenue that a company earns from selling one more unit of a product or service. It is crucial in understanding how revenue is affected by changes in sales volume. Specifically, it represents the rate of change of total revenue with respect to the quantity sold, making it essential for making production and pricing decisions.

When a business sells another unit, the marginal revenue accounts only for the extra income generated from that transaction, rather than the total revenue collected from all units sold. This concept is vital in determining the optimal level of production where the marginal revenue equals marginal costs, leading to maximized profits.

Other options do not accurately capture the essence of marginal revenue. Total revenue refers to all income generated but does not focus on the incremental aspect. Change in fixed costs does not correlate with revenue generated from sales and thus does not pertain to how much additional revenue is brought in by scaling sales. Lastly, the profit margin per unit sold speaks to the profitability of each unit sold rather than the revenue dynamics associated with changes in sales volume.